Strategic Marketing Management: Planning, Implementation and Control
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All basic functions of management are inherent in strategic management, namely: planning, organization, control and regulation. However, a special strategic character of management is connected not with the time features of management but with a necessity of factors of environmental influence, and is reflected in the specific “strategic” character of its one function - planning.
“Management practices refer to the overall style or ways, in which the organization manages it, focusing on three features: the way in which the organization has structured itself and its work; the ways in which the organization exercises control over its activities and its employees; and the overall climate that management creates in the organization. These three factors were chosen because they provide important and specific connections to employee commitment” (Fink 1995).
The essence of the Co-op’s strategic management is a strategy, which is developed within the limits of strategic planning. For example, enterprises of the average or small sizes try to enter the market with the product, without having a strategic planning. There is a necessity for a management strategy development, which should begin with formation of the purposes and enterprise strategy, passing then to the development of the purposes and a management strategy.
The practice proves the thesis correctness on the strategic approach to management and is necessary at present for a fast adaptation of the enterprise in the conditions of the saturated markets, showing demand for highly differentiated goods, and the amplifying non-price competition, forming corresponding demand and the commodity offer in the markets. A value of strategic management for the enterprise consists in the fact that it focuses attention on key, long-term factors of its success, concentrating efforts on the development of the most important long-term perspectives, connected with, first of all, strategic decision-making.
Management is the process of administration of people and resources in due course of the organization’s activity. Organizational ties are such types of communications, which exist between the workers of management personnel and are not mediated by the steady dependence between them, but basically by the unity of the purposes, realized by them. The managerial process basis is made by interaction between the elements of administrative structure - divisions, posts, and separate persons. A data exchange is necessary for decision-making within the limits of information interaction.
The Co-op’s Organizational Structure
According to Mintzberg’s theory of organizational structure, there are six basic parts of any organization. They can be distinguished in the Co-op.
Table 1. The Scheme of Organizational Structure (by Henry Mintzberg).
The operating core consists of the organization members, who fulfill their basic activities, connected with the production of goods and services. They implement four main functions:
1. They provide the initial production base;
2. They transform raw materials into production;
3. They distribute production;
4. They provide a direct maintenance of the production.
The operating core is a heart of any organization; the part, where the basic production is created, due to which it exists. However, the organizations, except for the smallest, need also an administrative component, which includes a strategic top, a median line and a technostructure.
The strategic apex should provide an effective implementation of the organizational mission and goals, and the needs of those, who control the organization, and has a definite power on it.
The strategic apex has three circles of duties:
- a direct control;
- management of the direct conditions of the organization’s operational activity – its interrelations with external environment;
- the organization’s strategy development.
A technostructure includes the analytics that operate organization, influencing the work of other employees. A technostructure is effective in case, when the use of the analytic tools allows increasing the workers’ productivity.
The Co-op’s strategic management consists of the implementation of the following stages:
- a target segment choice;
- marketing plan (goals, positioning, tactics);
- complex marketing pressure (goods, sale, price, communications);
- marketing budget;
- management plan and control realization;
- market - life cycle potential;
- steady competitive advantage;
- developmental strategy choice.
Many companies work without having officially accepted plans. In the Co-op, managing directors declare that till now they perfectly managed without formal planning, and thus, it cannot have essential value. They do not want to waste time on plan preparation in a written form. According to their comments, their financial situation changes too promptly in order to benefit the advantages from the planning.
These benefits are listed in the following order:
1. Planning encourages heads to think prospectively.
2. It conducts more accurate coordination of efforts, undertaken by a company.
3. It leads to an establishment of activity indicators for a subsequent control.
4. It forces a company to define the problems accurately.
5. It makes a company more prepared for sudden changes.
6. It visually shows the interrelation of duties of all officials.
Strategic planning is an administrative process of creation and maintenance of strategic conformity between the company’s purposes, its potential possibilities and chances in a marketing sphere. It is based on an accurately formulated policy, auxiliary purposes and problems, a healthy economic portfolio and a growth strategy.
Strategic control is also very important for strategic management. The purpose of strategic control over the performance of annual plans is to be convinced whether a company has the planned sales for a definite year, profits and other target parameters or not. The control of this type includes four stages.
First, management should put control indicators by months or quarters in the annual plan. Secondly, management should spend gauging of market activity indicators of the company. Thirdly, management should establish the reasons for any serious failures of the company’s activity. Fourthly, management should take measures to correct a position and liquidation of ruptures between the objects in view and the reached results.
Strategic management is a core of a universal policy of an enterprise, considering interests of all subjects of the market in its surrounding environment. Strategic management is based on the results of the analysis and forecasts of the existing conditions of environment, and also the account of strengths and weaknesses of an enterprise’s activity. Hence, it keeps and develops the achieved successes in the market, opens new possibilities, creates and provides prospects of an enterprise development in a long-term prospect.
Innovations are the main way, providing a constant growth and prosperity of any company. Peter Druker in his book “Management Practice” marks: “the main goal of any enterprise is the creation of a consumer; any enterprise has two (and only two) basic functions: marketing and innovations”. This idea gave birth to competitiveness. Each company should find the unique way of balancing between standards and innovations, between a balance and a contradiction promoting development.
It is necessary to remember constantly that the company’s resources are limited at management. Therefore, developing the departments working with consumers, one should not forget about the investments into the basic production.
Any innovation demands considerable efforts, financial and intellectual resources. The aspiration to realize an innovation in the unprepared environment can lead to losses. All creative possibilities of personnel should be mobilized for the company’s development. It can be made only in case if to use knowledge, intelligence and experience of all employees.
It is obvious that only the organization, which is able to catch and use modern knowledge and technologies, to apply cultural innovations, to introduce new forms of work with the personnel, and to improve the modes of work with the information can support and develop relations with an institutional environment, counteract competitors, maintain partner relations and satisfy public requirements. Successfully introduced and extended innovations allow solving the problem of integration of the organizational social structures and to reach the company’s goals.
Changes are the processes of movement and cooperation of objects and occurrences, the transfer from one state into another, appearance of new properties, functions and relations. However, it is necessary to consider social and cultural changes in the organizational environment.
Cultural change is a transfer of any cultural model (values or a social norm) from one state into another. Here are the examples of cultural changes:
- popularization (a value rating increase) of separate products;
- change of the power and submission norms;
- occurrence of new forms and ways of information transfer, etc.
The Co-op’s culture can appear acceptable for a certain period of time and conditions. The change of conditions of an external competition, state regulation, prompt economic changes and new technologies demand changes of the organizational culture in the Co-op, constraining the increase of its efficiency. A lot of time is necessary for creation of a new culture in the Co-op, as the old organizational culture takes roots in the consciousness of people, keeping adherence to it. This new approach includes the formation of the Co-op’s new mission, its purposes and ideology, model of an effective management, the use of experience of the previous activity, traditions and procedures, the estimation of the Co-op’s efficiency, its formal structure, the design of premises and buildings. The possibility of a cultural change is influenced by the following factors: the Co-op’s organizational crisis, change of management, life cycle stage, its age, size, and cultural level.
Organizational crisis in the Co-op. It calls an available practice in question and opens the possibilities for the acceptance of new values. The deterioration of the Co-op’s position, its financial absorption by any other organization, a loss of important clients, and a sharp break of competitors on the organizational market can be crisis examples.
Management change in the Co-op. As the top management is a primary factor in formation of the organizational culture, replacement of its chiefs promotes the introduction of new values. However, the new management in itself is not a guarantee that the workers will accept new values. New leaders should have a definite alternative vision what the Co-op can be and what kind of authority possess.
The Co-op’s life cycle stages. It is easier to change the Co-op’s culture in transition periods from its creation to the growth and from a maturity to decline. When it enters a growth stage, the basic changes of the organizational culture will be necessary. The Co-op’s culture has not taken roots yet, and workers will accept its changes, if:
• the Co-op’s previous success does not correspond to the modern conditions;
• the workers are not satisfied with the general state of affairs in the Co-op;
• the image of the organization’s founder and his reputation are under doubt.
Another possibility of a cultural change appears, when the Co-op enters a decline stage. Staff reductions, decrease in expenses and acceptance of other similar measures, which dramatize the moods of workers, are usually necessary at this stage; moreover, they testify that the organization is in a crisis.
A special strategy of a cultural management is necessary for a culture change in the Co-op. It assumes:
• the cultural analysis, which includes the audit of culture for an estimation of its current condition, comparison with the prospective (desirable) culture and an intermediate estimation of its elements needing changes;
• the development of special offers and measures.
Even in case if the conditions are favorable for changes, heads should not expect fast adaptation of new cultural values in the organization. The process of a cultural change can take a long time.
Corporate Social Responsibility
There are three basic interpretations of the concept of socially-responsible business. The first and the most traditional one emphasizes that unique responsibility of business is increase in profit for the shareholders. This point of view was sounded by Milton Friedman for the first time in 1971 and can be called “the theory of a corporate egoism”. There is only one social responsibility of business: to use the resources and energy in the actions, leading to the increase of profit, while it is fulfilled within game rules.
The second point of view is directly opposite to the Friedman’s theory. It is called the theory of corporate altruism. It was published simultaneously with the publication of a sensational article of Friedman in New York Times and belonged to the Committee on Economic Development. It was said there that the corporations are obliged to bring a considerable contribution to the improvement of the quality of the American life.
The third position is represented by one of the strongest “centrist” theories - the theory of “enlightened self-interest”. It insists that a social responsibility of business is simply a “good business” as it reduces long-term losses of profit. Spending money on social and philanthropic programs, corporations reduce their current profits, but create a favorable social environment in a long-term prospect and, hence, steady profits. Socially responsible behavior is the possibility for a corporation to realize the basic needs in survival, safety and stability.
The recent trends of a global economy development show that more companies, which work in the local markets, introduce the standards of “corporate social responsibility” in their activities.
In order to understand what a social responsibility is, it is necessary the find out what definition is given by the world business practice.
Corporate social responsibility is a concept, according to which the organizations consider the interests of a society, incurring responsibility for the influence of their activity on customers, suppliers, workers, shareholders, local communities and other interested parties, and also on environment. This obligation is beyond the obligation, established by the law to observe the legislation, and assumes that the organizations voluntary take additional measures for the improvement of a life quality of workers and their families, and also local community and a society as a whole.
Social responsibility of business is a voluntary contribution of business to a society’s development to the social, economic and ecological spheres, connected directly with the primary activity of the company and beyond the minimum, defined by the law.
Thus, preceding from the philosophy that business can grow and develop only in a close connection with care for environment and a human being, the Co-op has created a modern program of a corporate social responsibility, which continues to develop into depth and in breadth.
The Co-op grants the services of the highest quality with the observance of a corporate social responsibility, which includes: responsibility in front of customers, fair personnel selection, support of community and minimizing of the influence of its activity on environment.
Observance of business and corporate ethics
The responsibility in front of the personnel, maintenance of social security of employees, and the corporate projects, directed at the increase of motivation:
• preceptorship practice provides a comfortable adaptation of young experts to the professional requirements;
• improvement of professional skills on courses and trainings is an indispensable condition of satisfaction of a person in self-realization and a professional growth.
Creation of effective working conditions
Application of modern techniques, care for the health of employees:
• capacity strengthening, updating of techno park and the equipment of various specialization;
• safety precautions maintenance, official insurance of manufacture.
In other words, social responsibility is not business obligation, namely responsibility for business consequences to a society. Using the principles of a corporate social responsibility in practice, the company provides stability in the development by means of a risk reduction of loss of consumers through the realizations of the programs, directed at their support; reducing personnel outflow, strengthening support of development and motivation of the personnel and improving management of human resources; smoothing negative attitude of the state or a policy to business by means of support of social programs of the state.
“About public interest in business ethics and corporate social responsibility (CSR) during the past three or four decades, two conclusions can be drawn. First, interest in business ethics and social responsibility has heightened during each of the past forty years. Second, interest in business ethics and CSR seems to have been spurred by major headline-grabbing scandals. Certainly, society has taken an on-again, off-again interest, but lately this interest has grown to a preoccupation or obsession” (Sims 2003).
The following recommendations should be given to the Co-op in order to improve and expand their CSR efforts:
In world practice the activity in the field of CSR is perceived as a pragmatic direction of business; and it is one of the tools, which allows, for example, raising business reputation, a company’s capitalization, establishing an effective and balanced connection with the state, shareholders, consumers, personnel, partners, and local communities. The above-mentioned reasons make the Co-op to conduct the activity connected with CSR.
The Co-op should take an active part in corporate social responsibility, namely it should include the following internal social responsibility:
1. Labor safety;
2. Salary stability;
3. Maintenance of socially significant salary;
4. Additional medical and social insurance of employees;
5. Development of human resources through training programs;
6. Rendering assistance to workers in critical situations.
The external social responsibility of the Co-op should include the following actions:
1. Sponsorship and corporate charity;
2. Assistance to the environmental protection;
3. Interaction with local community and local authorities;
4. Readiness to participate in crisis situations;
5. Responsibility in front of the consumers of the goods and services.
At management change, the Co-op, first of all, should review all expenditure clauses, having established the rigid control of execution of the established specifications that will allow keeping finance costs at a certain level. However, it is not necessary to reduce essentially salaries and awards to employees; a sharp falling of efficiency can become a consequence of it. It is important to review organizational structure of the company for the subject of the exception of unnecessary levels of management. As a variant, it is possible to develop a transparent scheme of bonuses, which should motivate the personnel on decrease in every possible cost; thus, the saved funds will be partially paid to employees.
In conclusion, it should be said that it is possible to achieve successful management operation with the help of modern management systems. The Co-op’s management is based on the information. In the Co-op’s managerial process there are informational flows between the object and subject of management of an economic unit, and also between it and an external environment. The direction of internal informational processes characterizes a straight line and a feedback in a management system.